The ACCC is continuing to crack down on unfair contract terms and has instituted Federal Court proceedings against CLA Trading Pty Ltd trading as “Europcar Australia” (Europcar) that could see refunds to consumers who have paid Europcar money pursuant to the specific contract terms currently under the scrutiny of the Court.

Businesses often use standard form contracts (terms of trade) in dealing with consumers. As the name suggests, these contracts are standard to most, if not all, consumers and are presented on a take-it-or-leave-it basis.

Under the Australian Consumer Law, if a term in a standard form contract is declared ‘unfair’, the term will be void and treated as if it never existed in the contract. Importantly, this does not mean that the entire contract would be void. Rather, only the unfair term would be extracted from the contract, with the rest of the contract continuing to operate as normal. Therefore, in the current Europcar case, a decision in the ACCC’s favour could see hire car customers no longer being bound by certain contract terms that are currently used by most car hire companies in one form or another.

The ACCC alleges that the following terms in Europcar’s standard vehicle rental contract are unfair and should be declared void:

terms requiring consumers to pay Europcar a “Damage Liability Fee" (currently up to $3,650) irrespective of fault if the rental vehicle is damaged or stolen, or if there is third party loss; and

terms making the consumer fully liable to Europcar if the rental vehicle is damaged or stolen, or if there is third party loss, where a consumer breaches the rental contract, no matter how trivial the breach and regardless of whether the breach caused the damage or loss.

The matter is listed for a Directions Hearing this month in Perth and we will keep you updated as it progresses.

A verdict in favour of the ACCC would represent another victory for consumers since the ACCC’s first successful action based on unfair contract terms against internet service provider ByteCard. Regardless of the outcome, this case is more evidence of the ACCC’s mission to do away with unfair contract terms between companies and consumers and it is a reminder to businesses to have their terms and conditions reviewed to ensure they are valid and enforceable.

If you would like your terms and conditions of trade reviewed, please contact: